Abuse of alcohol is a frequent diagnosis among people with severe mental disorders (SMD), particularly among those who are homeless. A significant proportion, typically 50% or more, of people with SMD abuse alcohol. Their alcohol abuse is strongly associated with clinical disability, homelessness, institutionalization, and treatment difficulty. To address this problem, the Connecticut Department of Mental Health has provided funding for the creation of a new assertive community treatment (ACT) team to provide integrated treatment for substance abuse and SMD to dually diagnosed clients in Connecticut's largest and poorest city, Bridgeport. The proposed research will be a collaboration between the Connecticut Department of Mental Health and the Dartmouth Medical School to conduct a rigorous evaluation of the effectiveness and costs of the ACT program design for dually diagnosed clients in an urban area where alcohol, cocaine, and other drugs are readily available and widely used. Half of the consenting study participants in both the ACT and standard Case- management condition who reach the active treatment phase will be randomly assigned to a contingency management intervention which will employ behavioral treatment based on the community reinforcement approach. The research will carefully document the interventions provided to clients in each treatment condition to document both what interventions actually occurred and the costs of the interventions so that any differences in clinical outcomes and costs can be attributed to differences identified in the processes of care. The first objective of the project is to decrease the problems most characteristic of dually diagnosed clients: alcohol abuse, housing instability and homelessness, and institutionalization in hospitals and jails. A second objective is to determine whether good outcomes in these primary domains will be associated with more general improvements in symptoms, functional status, and quality of life. A third objective is to identify the qualities of case management that are associated with successful engagement and treatment. Separate data analysis strategies will be applied to each of these objectives. The research design is a randomized clinical trial with a 2x2 factorial design (service organization by community reinforcement). A total of 150 consenting, dually diagnosed clients will be randomly assigned to either ACT or to standard case management, with half of the participants from each service condition who enter active treatment participating in the community reinforcement intervention. Study participants will be interviewed with quantitative instruments at baseline and at 6-month followup intervals for 3 years.